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before the liquidation. We disagree. That was before the last
return for the years in issue was due from House of Babes. The
Commissioner could assess tax for House of Babes' earliest
taxable year in issue, 1984, at least until March 15, 1988, and
beyond that if House of Babes committed fraud.
Petitioners contend that imposing transferee liability on
them is unlawful double taxation. We disagree. Respondent is
trying to collect House of Babes' taxes; no prohibited double
taxation is present here.
Petitioners contend that section 6901(a)(1)(A) does not
authorize respondent to collect an amount equal to 100 percent of
the value of the property they received from House of Babes. We
disagree. Respondent may collect the lesser of (1) the
transferor's tax liability, including additions to tax and
interest, or (2) the value of the assets the transferee received,
plus interest. Peterson v. Sims, 281 F.2d 577 (5th Cir. 1960);
Mysse v. Commissioner, 57 T.C. 680, 703 (1972).
3. Conclusion
We conclude from the badges of fraud that are present here
that House of Babes fraudulently intended (through its
shareholders) to transfer its assets to its shareholders with
intent to delay payment of its creditors. Harper v. United
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